Contract cancellations are an inevitable part of doing business. It’s never pleasant, but with the right contract terms and a strategic approach, you can protect yourself and minimize financial losses. In this blog, you’ll learn how to handle a cancellation request professionally and legally.
1. Talk to the Client: An Opportunity for a Solution
The first step is to engage in a conversation and understand why the client wants to cancel. There may be a misunderstanding, or you might be able to offer a solution that better suits their current situation.
Example: You’re a social media manager, and a client wants to stop working with you because they believe they can manage their accounts themselves. Instead of immediately agreeing, you start a conversation. You discover that they struggle with algorithms and have difficulty growing their followers. You offer a customized package where you guide them strategically rather than handling full account management. Happy client, happy you!
If the collaboration is adjusted, make sure to document the changes in writing through an addendum to the contract. Don’t have clear procedures for contract modifications yet? These can be legally formalized.
2. Review the Contract Terms
If the client remains firm in their decision, check your contract for:
- Notice period – Is there a minimum cancellation period agreed upon?
- Deposit or retainer – Does the client still need to pay for work already completed?
- Termination fee (‘kill fee’) – Are you entitled to compensation for early termination?
If your contract lacks these clauses, you risk losing income. A well-drafted contract helps prevent such situations.
Example: You’re a graphic designer and have already spent hours working on the first concepts for a client. Suddenly, they cancel and expect a full refund. Not so fast! If your contract states that deposits are non-refundable, you’re in a strong legal position and entitled to payment for your work.
3. Intellectual Property and Usage Rights
If your services involve creating deliverables, such as social media content, branding, or copywriting, determine what happens to these materials upon cancellation.
Key questions:
- Who retains ownership of the work?
- Can the client continue using the work after cancellation?
- Is payment still required for completed work?
Example: You’re a copywriter and have written a comprehensive website text for a client who suddenly cancels. Can they still use these texts without full payment? Not if your contract is properly drafted! Ensure your contract protects your intellectual property rights so that your work cannot be used without fair compensation.
4. What If You Don’t Have a Contract?
No written contract? That makes things more complicated but not impossible. Check previous communications, such as quotes or emails, that outline agreements. In the Netherlands, verbal agreements can also be legally binding, but proving them can be challenging.
If you have nothing documented, this is an expensive lesson: never work without a contract again. Want legal certainty? Have a tailored contract drafted so this never happens to you again.
5. Take a Deep Breath… and Learn from the Experience
A contract cancellation can be a blow to your confidence, but stay professional and use the experience to improve your processes:
- Are your contract terms clear enough?
- Can you screen your clients better?
- Can you improve communication to avoid misunderstandings?
Sometimes, cancellations are unavoidable, but if you learn the right lessons, your business will only grow stronger.
Protect Your Business with Solid Contracts
Whether you work on a project basis or provide monthly services, contract cancellations are a reality. By communicating clearly, knowing your contract terms, and being legally prepared, you can avoid stress and financial losses.
Want to ensure your contracts protect your business from unexpected cancellations? Contact me today, and I’ll help you create legally sound custom contracts. That way, you can work with confidence, security, and no unpleasant surprises!
